coking coal could rise 300 percent

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    Australia coking coal prices for Japan to treble-paper
    SYDNEY, April 5 (Reuters) - Australian coking coal prices for export to Japanese steel mills are set to treble to $300 a tonne, creating a bonanza for BHP Billiton Ltd and other producers, the Australian Financial Review reported on Saturday.

    Extremely tight supplies of coking coal would increase contract prices for the year beginning April 1, 2008, from $98 in the fiscal year just ended.

    A spokeswoman for BHP declined to comment on Saturday when contacted by Reuters. BHP has been in tense negotiations with Japan over the coal prices for months.

    The Financial Review report indicates that an even greater price rise for Australian coking coal may be looming than earlier expected.

    Japanese trade sources said that BHP had been seeking a price rise to $300 a tonne fob for coking coal but that the Japanese steel mills were reluctant to accept such a sharp price increase, Reuters reported on Thursday.

    Spot cargoes of coking coal have been sold recently at prices as high as $350 a tonne.

    China's burgeoning steel production has been soaking up raw steelmaking materials throughout Asia, while production from Australia's coking coal province in central coastal Queensland state has been hit by floods.

    Coking, or metallurgical, coal is Australia's second largest export, after iron ore. The government's Australian Bureau of Agricultural and Resource Economics recently forecast that the value of coking coal exports in 2008/09 would double to A$28 billion from A$14.2 billion the year before.

    It did not forecast prices. But a $300 a tonne contract price for 2008/08 supplies would easily outstrip the bureau's forecast of additional export income for coking coal exports.

    With Australia forecast to export 136.3 million tonnes of coking coal in 2008/09, an extra $202 a tonne on the price of the coal would add $27.5 billion, or A$30.0 billion, to the value of Australia's exports in the Japanese April/March fiscal year.

    Australia is also involved in protracted negotiations with Asian steel mills for iron ore prices for 2008/09.

    BHP Billiton and its main rival Rio Tinto Ltd/Plc are pressing for price rises greater than the 65 percent and 71 percent, depending on grade, recently agreed between Asian steel mills and Brazil.

    This is being resisted by Chinese and Japanese steelmakers.

    Australia is also negotiating with Japanese power utilities for a big contract price increase for thermal coal, used to generate electricity.

    ($1=A$1.09)

    (Reporting by Michael Byrnes)
 
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